Mutual Funds/Mutual Fun Liabilites

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Expert: Warren Boroson - 9/18/2009


Question
Hey Warren, I was reading about NAV and I had a question, where would a mutual fund have liabilities, where do they come from. I understand what liabilities are but wouldn't a mutual fund only buy stocks and bonds, how do they create obligations to others?

Thanks
Tony

Answer
Dear Tony:

Off the top of my head, I'd venture that liabilities include the cost of accounting...the cost of having a company hold the securities the fund has bought...the cost of rent... the cost of buying and selling...malpractice insurance...

Liabilities are all the mutual fund's debts, are they not?


WB

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Warren Boroson

Expertise

Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.

Experience

Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.

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